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Trade-Ideas: Jones Group (JNY) Is Today's "Perilous Reversal" Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Jones Group ( JNY) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Jones Group as such a stock due to the following factors:

  • JNY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $29.3 million.
  • JNY has traded 1.2 million shares today.
  • JNY is down 3% today.
  • JNY was up 6.1% yesterday.

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More details on JNY:

The Jones Group Inc. engages in the design, marketing, and wholesale of apparel, footwear, jeanswear, jewelry, and handbags. The stock currently has a dividend yield of 1.3%. Currently there is 1 analyst that rates Jones Group a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Jones Group has been 1.0 million shares per day over the past 30 days. Jones Group has a market cap of $1.3 billion and is part of the services sector and retail industry. The stock has a beta of 2.09 and a short float of 7.3% with 2.83 days to cover. Shares are up 41.8% year to date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Jones Group as a hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

Highlights from the ratings report include:

  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • 38.08% is the gross profit margin for JONES GROUP INC which we consider to be strong. Regardless of JNY's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of -0.40% trails the industry average.
  • JNY, with its decline in revenue, slightly underperformed the industry average of 3.7%. Since the same quarter one year prior, revenues slightly dropped by 1.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Textiles, Apparel & Luxury Goods industry and the overall market, JONES GROUP INC's return on equity significantly trails that of both the industry average and the S&P 500.
  • Net operating cash flow has decreased to $138.50 million or 24.64% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.

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